Treasury bonds to stimulate economy

To fill the gaps in 2009 budget revenue the state has begun implementing a policy not used for some time - issuing treasury bonds. The state seeks to accumulate GEL 260 million by selling treasury liabilities to the banks.

Minister of Finance Kakha Baindurashvili suggests that due to the current world crisis banks issue loans with many preconditions. He states that treasury bonds are very attractive products as they guarantee stable revenues for the banks, reinforcing their assets. Even with very low interest treasury bonds are profitable and acceptable to any bank as there is no risk.

Former Minister of Economy and MP Lado Papava is critical of this action. He suggests that it will make it more difficult to obtain loans from banks and credit will become more expensive. Issuing treasury bonds will make it easier for the banks to keep going but credit resources will be lost, thinks Papava.

Georgian banks have welcomed the treasury bonds issue. TBC Bank and HSBC Georgia say it is a positive step. They consider it appropriate to stimulate banks to develop their activities further. The near future will show however if this step benefits the general population rather than just the banks.